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Talawakelle Tea
Estates Ltd has recorded a turnover of Rs 1.62 billion and a
profit after tax of Rs 105.3 million in calendar 2005, the
company said in its annual accounts.
This also reflected an 8 percent increase on the previous year’s
tea production in accordance with higher volumes in production
and improved tea prices.
The company made a provision for income tax and deferred tax
expenses amounting to Rs 6.8 million. The proposed dividend rate
to shareholders is 15 percent while total dividend payable is Rs
35.6 million. The share prices of the company were in the top
three amongst listed companies in the sector throughout 2005, it
said.
The company will focus on quality to benefit from the buoyancy
in the tea prices during the season. “Current prices at the
auctions are remunerative, and a crop shortfall in Kenya is
giving a fillip to prices as per industry analysts,” said Rajan
Yatawara, Chairman, Talawakelle Tea Estates Ltd. According to
him the unfavourable events in Iran can have a negative impact
on demand while the increased (buying) activity in the CIS and
in Middle Eastern countries is due to higher oil revenues.
He said they are optimistic that the authorities will be mindful
of a need for an exchange rate which is competitive for exports.
The exchange rate made a significant impact on the company’s
performance affecting tea prices, especially over the first
three quarters of the year.
Despite many representations made, the company is still
concerned that tea is exempt from VAT and that on inputs this
has to be absorbed as a cost. This imposes a heavy burden on the
industry along with the tea to be sold in the domestic market.
Tea being a cyclical industry, the company will pursue a
strategy to add value to their tea, reduce costs and diversify
the earnings which also includes an accelerated fuel wood
planting programme to develop their dendro and hydro resource
potential to reduce the dependence on fossil fuels. The
anticipated savings are substantial and already two factories
have been converted, with additional five this year.
The diversification will be done by moving into green and
organic teas. “We see a potential for increasing production of
bell peppers, and have made additional investments to raise
production to 20,000 kg in 2006,” said Yatawara.
The company continued to invest in its core business investing
Rs 140 million for long-term sustainability and growth. The
Talawakelle Tea Estates Ltd was top ranked amongst RCPs
(Regional Plantation Companies) for the fourth consecutive year
in its prices at the Colombo Auctions, reflecting its status as
a premium tea producer.
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